What Is Pre and Post Money Valuation?
In a startup funding round, the pre-money valuation is what a company is worth before new investment comes in. The post-money valuation is the value immediately after the investment, simply the pre-money value plus the cash invested. These two figures determine how much ownership a new investor receives in exchange for their money.
How to Use This Calculator
Enter the pre-money valuation agreed with investors and the total investment amount for the round. The calculator instantly returns the post-money valuation, the investor's equity percentage, and the remaining equity held by founders and existing shareholders.
The Formula Explained
Post-Money Valuation = Pre-Money Valuation + Investment Amount. The new investor's stake is their investment divided by the post-money valuation: Equity % = Investment ÷ Post-Money × 100. Because the denominator is the post-money figure, the investor never owns more than the share their cash represents of the enlarged company.
$$\text{Post-Money} = \text{Pre-Money} + \text{Investment}$$
$$\text{Investor Equity} = \frac{\text{Investment}}{\text{Post-Money}} \times 100\%$$
$$\text{Founder Equity} = 100\% - \text{Investor Equity}$$
Worked Example
Suppose a startup negotiates an $8,000,000 pre-money valuation and raises $2,000,000. The post-money valuation is \(\$8{,}000{,}000 + \$2{,}000{,}000 = \$10{,}000{,}000\). The investor's equity is \(\$2{,}000{,}000 \div \$10{,}000{,}000 \times 100 = 20\%\). Founders and existing shareholders retain the remaining 80%.
FAQ
Why does investor equity use post-money, not pre-money? Ownership is always a slice of the whole company after the cash is in, so the post-money value is the correct denominator.
What if I know the post-money and equity instead? You can rearrange: Pre-Money = Post-Money − Investment, and Investment = Equity % × Post-Money.
Does this account for option pools or convertible notes? No — this is the basic calculation. Option pool expansions and converting notes can dilute founders further before the round closes.
